Improving Your Credit Score

Improving Your Credit Score

Each day, millions of people throughout this country struggle with the effects of having a bad credit rating. Some are turned down for credit cards or vehicle loans, others learn their applications for a mortgage loan have been denied. If you are dealing with the restrictions that can result from having poor credit, you may already realize that your credit score is in need of repair. These days, getting information about how to fix your credit score doesn't have to be frustrating or stressful, thanks the abundance of financial resources available to consumers.

The first step in taking control of your credit situation is learngin what information is listed on your credit reports. You can do this by ordering your credit reports for free from www.AnnualCreditReport.com or by calling 1-877-322-8228. This service is provided by Equifax, Experian, and TransUnion, the country's three largest consumer credit reporting agencies that maintain and distribute your credit report. The Fair Credit Reporting Act entitles you to receive, by request, a free copy of your credit report from each of the credit bureaus once every 12 months.

Tips to Increase Your Credit

Based on the information in your credit reports, credit scores are an important tool used by lenders to calculate the likelihood that a borrower will repay a loan. Fortunately for those with lower credit scores, this rating is not set in stone. there are ways you can improve your credit score.

* Pay your bills on time - Payment history makes up 35 percent of your credit score. A period of not making your payments on time can cause your credit score to drop but since the impact of a late payment diminishes over time, focusing on making all payments on time going forward will get your score moving in the right direction.

* Get current on missed payments - If payments are already delinquent, their impact on your credit score will become increasingly more devastating the longer they remain unpaid. A couple of 30 day late payments are excusable, but just one 90 day late payment can cause your score to come crashing down.

* Contact your creditors if you are having a hard time making payments - If you foresee that you will be unable to keep current on your payments, you may be able to make arrangements with your creditors such as extending the loan period that will help you get back on top of things. In the end, you could end up paying more in the long run, but if it keeps you from getting further behind, it will be worth it for your long term finances and for your credit rating.

* Try to keep low balances on your credit cards - Outstanding debt makes up 30 percent of your credit score. The closer you are to reaching the limit on your credit cards, the less stable your finances will appear. Keeping credit card balances below 30 percent of the available limit will make your utilization ratio look better.

* Avoid shifting your debt between credit cards - Transferring debts to a low interest rate card is a solid strategy when working to pay down debt, but a history of transferring balances between cards makes it look like you are robbing Peter to pay Paul instead of being able to make your monthly payments.

* Carefully study credit offers before accepting - Some loans, including department store cards, are loaded with fine print and other strings attached that can end up resulting in big problems down the road. For example, some no payment, no interest financing programs offered by retailers include rates that can skyrocket if you are late on a single payment and clauses where you may still be responsible for interest accrued during the "no interest" period.

* Look into credit repair services - For people who need additional assistance addressing their bad credit, another excellent resource for consumers are professional credit repair services. Professionals can provide their valuable expertise on important matters like legally disputing the questionable negative items on your credit report and specific steps you can take in order to make the most of your credit score.

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About The Author
More information about credit and steps people can take to clean their credit can be found by visiting Lexington Law's Credit Education resources. More information about Lexington Law can be found at www.LexingtonLaw.com

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